Mobilising the creation of a risk governance culture
1International Risk Governance Council (IRGC), Switzerland; 2University of Stuttgart, Germany; 3Swiss Reinsurance Company, Germany; 4United Nations Strategy for Disaster Reduction (UNISDR); 5Swiss Federal Institute of Technology, Zurich (ETHZ), Switzerland
In a globalised and interdependent world, systemic risks can have far remote impacts. They challenge conventional risk management, which requires new concepts and tools to avoid the spread of risks between sectors and countries, and cascading chains of events. IRGC is interested in a number of aspects of risk governance of systemic risks, and we wish to discuss at this session at IDRC 2012 how different risk cultures coexist, can be better understood, can be improved and can cooperate;
we wish to mobilise the creation of appropriate risk cultures to stimulate improved risk governance.
The interdependence of risks within and between complex systems requires that risk assessment, communication and management are adapted to the new systemic nature of many risks, which may span across sectors and countries. This requires the collaboration between business, public authorities and the society. However, competition and conflicts of interests, whether economic, political or cultural, as well as divergent views on issues prioritisation, between business, governments and non-governmental organisations will determine the reality of future global risk management. The term of "risk governance" reflects the controversial nature of the endeavour. Sharing common cognitive risk perceptions or acknowledging the existence of different risk perceptions is therefore conditional for developing coordinated risk governance strategies.
The role of emerging economies and developing countries in the management of systemic risks is often underestimated. Risks emerging anywhere can span quickly to the entire world and affect vulnerable populations or assets. Investments in emerging economies and developing countries for creating effective risk policies, regulation and overall appropriate risk cultures can provide rapid and cost-effective returns, for the benefit of all. The mobilisation of appropriate risk governance cultures constitutes the backbone for sustainable development that helps to anticipate events in advance, prepare for adverse consequences and build resilience to unexpected events.
“Risk culture” refers to a shared set of beliefs, values and practices within an organisation regarding how to assess, address and manage risks. A major aspect of risk culture is how openly risks can be addressed and information about them shared among a risk community. Risk cultures will vary between organisations, according to their needs and circumstances. However, a good risk culture always produces a sound basis for deciding how the competing pressures for risk avoidance, risk reduction, risk transfer and risk taking are resolved.
The International Risk Governance Council (www.IRGC.org) aims to launch a work project, in cooperation with its regional network partners, to better understand and develop appropriate cultures for risk governance, relying on substantive and empirical regional analysis of the concept and notion of risk. The aim is to raise awareness and build capacity for improving risk governance in selected countries.
The world is now facing a redefinition of risk or emerging risk concepts, of certain dimensions require innovative expertise. This includes: how to deal with interdependent risks within and between complex systems, how to make decision in context of uncertainty (especially with regard to new or increasing hazards and secondary consequences of the risk that they cause), increasing or changing vulnerabilities, unbalanced and unsustainable risk sharing (in communities, countries and even globally) and frequent lack of risk ownership (which prevents effective risk management). More specifically, the “spread” of moral hazard, the failure to take responsibility or be accountable, the lack of capacity to resolve trade-offs (in particular when conflicting economic interests or values are involved), require that risk governance is grounded on appropriate risk cultures.
This session will discuss how to improve the perception and understanding of risk in various cultures, countries and settings, and how to support the mobilisation, creation or proactive development of risk cultures, in order to create conditions for improved risk governance.
IRGC's project will aim to provide decision makers with elements (“building blocks”) that can be used in various and specific regional or local contexts to support appropriate risk governance cultures. More specifically, IRGC and its partners in this session will propose to engage in an awareness and capacity-building programme, targeting in priority local actors in emerging economies and developing countries, but involving also country wide actors that would co-determine the guiding principles and main elements of such a programme.
Risk governance requires multi-stakeholder and coordinated approaches, to provide different but complementary expertises and views. Invited speakers will thus develop various aspects of how to build appropriate risk governance cultures.
The role of local actors for creating effective risk governance culture
United Nations Office for Disaster Risk Reduction (UNISDR)
Social media is playing a key role in advancing messages in a community. Political leaders have recognized the impact and speed from using such tools and reaching a broader audience. A redefined “risk governance culture” is emerging, a more informed community who in return will demand better responses to its political leaders. The role of international organizations to channel information and findings to a wider public other than national governments in an accessible and practical way is only growing. Communities and their local leaders are enthusiastic to participate in this information exchange leading to their social progress. UNISDR and its Making Cities Resilient campaign aims to reach a variety of local actors, to foster dialogue and partnerships amongst the different sectors of society, collectively discussing better ways to build a more effective risk governance culture. The campaign offers tools to guide processes and start reflecting on how to put together the different local actors in one collective framework with a single strategy to reduce risk and reinforcing the risk governance culture.
Risk cultures, the social construction of risk, and coordinated responses to global and systemic risks
Center for Security Studies, ETH Zürich, Switzerland
There is no question that the global society is connected now more than ever. With this increasing connectivity arguably comes greater societal sensitivity in the systems that support this global society – particularly because society relies on a variety of complex and interdependent social and technical supporting services. At the same time, the awareness and prevalence of global and systemic risks has increased. Such risks will have impacts not just at the local or regional scale, but also on the global scale, with multinational and cross-cultural consequences.
Coordinating effective responses to such global and systemic risks requires an understanding and appreciation of the differing risk cultures in communities, societies, organisations and institutions, and the way risk culture is influenced by the social construction of risk at the individual and community levels. ‘Risk culture’ describes an organisation, community or institution’s beliefs, values and practices regarding a risk. Scholarship on the social construction of risk acknowledges that risks, and peoples’ perceptions, beliefs, values, attitudes and behaviours associated with those risks are socially and culturally framed and discussed.
This presentation will explore the implications of the social construction of risk in the development of risk cultures, and the complication this raises for coordinating appropriate responses to global and systemic risks. The presentation focuses on individual and community constructions of risk, and particularly on some of the most important factors influencing individual and community level risk cultures, like trust, sense of community and social norms among others. Lastly, a relatively ‘simple’ example of the social construction of wildfire risk in Australia is presented to illustrate the difficulties faced by institutional risk management agencies when advocating wildfire preparedness activities at the household and community levels.
Risk culture: implications for risk governance
University of Stuttgart
Deciding about the location of hazardous facilities, setting standards for chemicals, making decisions about clean-ups of contaminated land, regulating food and drugs, as well as designing and enforcing safety limits all have one element in common: these activities are collective endeavours to understand, assess and handle risks to human health and the environment. These attempts are based on two requirements. On the one hand, risk managers need sufficient knowledge about the potential impacts of the risk sources under investigation and the likely consequences of the different decision options to control these risks. On the other hand, they need criteria to judge the desirability or undesirability of these consequences for the people affected and the public at large. This second part is an integral aspect of risk culture, understood as the systems of norms, vales and visions that an organization shares among its members Within the portfolio of organizational culture, criteria on desirability are reflections of social values such as good health, equity, or efficient use of scarce resources. Both components – knowledge and values – are necessary for any decision-making process independent of the issue and the problem context.
On risk governance - a reinsurer's view
Swiss Re Centre for Global Dialogue
A good risk governance and risk culture is essential for the assessment and appropriate management of risk and related uncertainties. This holds true for the private sector on a company level as well as the public sector. This presentation will highlight some of the key aspects from a reinsurer's point of view and exemplify how these can be successfully applied in designing effective risk adaptation, mitigation or transfer solutions. Examples will include risk transfer mechanisms on the country or supra-national level such as Swiss Re's earthquake risk solutions for the Government of Mexico as well as the Caribbean Catastrophe Risk Insurance Facility.